Assume That Switzerland and Britain Have Floating Exchange Rates

question 214

Multiple Choice

Assume that Switzerland and Britain have floating exchange rates. Other things unchanged, if a tight money policy raises interest rates in Britain as compared to Switzerland,

• A)gold bullion will flow into Switzerland.
• B)the Swiss franc will depreciate.
• C)the pound will depreciate.
• D)the Swiss franc will appreciate.

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Definitions:

Accounts Receivable

Amounts owed to a business by its customers for goods or services delivered on credit, expected to be collected in cash.

Notes Receivable

Financial assets representing amounts owed to the holder by the issuer that are supported by formal agreements or promissory notes.

Other Receivable

Amounts owed to a company by entities other than customers, such as tax refunds, advances to employees, or other companies.

Employee Advance

A prepayment to employees by a company, often covering travel expenses or payment before the regular payroll date.